BUSINESS PROCESS SOLUTIONS
CUSTOMER SEGMENTATION AND TARGETED
MARKETING CAMPAIGNS
KEY STEPS IN THE
PROCESS
• Consolidat ing fig ures from
differ ent dat a sources
• Client analys is and
segmentat io n
• Select ing clients for a
campaign
• Sett ing up a campaig n a nd
assigning clients to the
addres s lis t
• Implement ing t he campaig n
over a s elec ted
communicat ion channel
• Ident if ying c ampaign
response
• Evaluating t he s uccess rate
of a campaign
• Customer segment ation
KEY BENEFITS:
• The ac quis it ion of a
comprehens ive client
overv iew, including histor y
and a calc ulation of various
client characteristics
• The opport unit y o f client
segmentat io n - finding
groups of clients wit h
similar characteristics and
proj ects suitable for a
specific g roup
• Targeted c ampaig ns and
success rate evaluation
Oracle makes customer segmentation and targeted marketing campaigns a real thing!
We offer complete solution for the process of analyzing data about clients, using the
result of analysis for addressing clients with targeted campaigns, and evaluating their
response. Oracle solution enables to control client acquisition, increase share of a
client, prevent clients’ defection, avoid delinquent behavior among clients, and ensure
efficient cost management.
Solution Architecture
The proposed solution covers the whole process of client analysis and implementation of targeted
marketing campaigns. The diagram below sets out the main solution elements and the individual steps
of the process, applied to each campaign.
5
Communication Channels
Management
Process of Client Analysis and Targeted
Application
6 4
Campaign
Marketing Campaigns Realization
1. Integration of information from transactional
systems
Transactional Database
2. Client analysis (searching for cross sell/up
(Campaign
Transational sell, churn prevention, customer acquisition
Management) based on customer and product knowledge)
System 1
3 3. List of customer selection in order to be
In Information Portal
addressed by campaign. Transfer to
Client Analysis
Transational 7 transactional database of campaign
management application
System 2
4. Campaign definition and creation of final
target list (combination with external sources
Transational Analytical Database possible)
System 3 1 (Data Warehouse) 2 5. Realization of campaign via selected
communication channels (mail, e-mail,
contact center etc.)
Other &
6. Capturing response to campaign
External Data
7. Transfer of all data necessary for campaign
Sources
evaluation
Coverage of the client analysis process and implementation of targeted marketing campaign
Consolidation of information from different sources of data
If a client analysis is to be successful, all the related information must be stored in one place. The data
must be:
• Integrated – Data from different information sources (transactional systems and where appropriate
external sources) are pooled in a single database, allowing for a comprehensive view of the
subjects of interest (e.g. client, product, channel).
• Transformed – Data in transactional systems are arranged with a view to process transactions like
entering new customer, assigning new product to existing customer etc. They are not intended for
making analysis. Data transformation ensures that questions can be asked, moreover can be asked
 BUSINESS PROCESS SOLUTIONS

upon large volumes of data, which would otherwise be impossible or very difficult to consider.

• Historical – Besides absolute figures, comparisons with developments in previous periods are
another important aspect of data evaluation. Historical data availability is a prerequisite when
analyzing trends.

• Detailed – Summary figures are inadequate when identifying 'behavioral characteristics'. A

behavioral characteristic might be, for example, whether a bank client withdraws small regular
amounts or large one-off sums. This sort of information cannot be obtained from summary monthly
balances of the client's account. The storage of detailed data also ensures that new requirements
when developing and expanding the system can be met.

So-called data warehouse will supply integrated, transformed, historical, and detailed data, which will
be updated accordingly. Updates are automatic; the correctness and completeness of data are monitored.

Client Analysis
If consolidated and up-to-date data are available, they can then be analyzed. Set of business goals is the
basis for an analysis. The first step of a client analysis entails a search for questions, which, if answered,
can lead to fulfillment of set sales targets. If a sales target is an increase in the cross-sell ratio, the
related question might read 'Which customer group can tend to buy a specific product?' or 'What is the
typical sequence of usages of products for particular customer group?' or 'What is the typical sequence
of usage of particular products for particular group?'

These general questions need to be further transformed so that they become more specific, e.g. 'How
many clients who use product X also use product Y?' or 'How does the ratio of clients with and without
product Y differ from clients with characteristic A and clients with characteristic B?'

The second step of an analysis, finding answers to specific questions, is a key task of the information
portal used to access data in the data warehouse. The information portal's analytical instruments allow
users to ask questions and receive answers in the form of tables, cross tables and graphs. Graphs are
particularly suitable for identifying coherent events. For example, a pie chart displaying the 'Number of
clients who use individual products and product X at the same time' can quickly give an idea of how
popular individual products are as supplements to product X. A major feature of the instruments used is
that questions can be formulated easily, without the help of IT experts, and that replies are given swiftly
and questions are simple to modify. For example, figures can be viewed from a different perspective, in
greater or lesser detail; data selection can be restricted based on a particular condition, etc. The
flexibility of an instrument is a prerequisite when conducting an interactive analysis, as there are usually
dozens of specific questions being asked and one replied question generates many others.
 BUSINESS PROCESS SOLUTIONS

Steps of analysis:
Examples of outputs from individual
steps:
Formulation of business Increase cross-sell ratio
goal
Searching for general
questions, which could For which group of customer is specific a
lead to goal fulfillment particular group of products?

Transformation general
questions into specific How does the ratio of clients who have and
questions, answers for do not have product Y differ for clients with
them could be find by characteristic A and clients with
software analytical characteristic B?
tools
Clients with characteristic A have very often
Formulation of piece of both product X and product Y.
knowledge
Suggestion of actions,
Offer to clients with characteristic A having
which should lead to
product X and having no product Y the
goal fulfillment based
product Y.
on obtained piece of
knowledge Offer to new prospects with characteristic A
the joined package of products X and Y.

Steps of analysis during the preparation of each targeted marketing campaign, including output
examples

Selecting clients for a campaign

Concrete piece of knowledge must be formulated based on the results of the previously described
answers, e.g. 'Clients with characteristic A who are from region B very often have both product X and
product Y'. This knowledge than serves for a decision on appropriate action, e.g. 'Approach clients
with characteristic A from region B who have product X but not product Y with an offer of product Y'.

For this action to be taken, a list of clients with required attributes must be available. Also this list can
be generated via analytical tools of the information portal. The list can contain client identification
information and other information about the clients.

Setting up a campaign and assigning clients to list

The next step is to establish the definition of the campaign. It’s done in the campaign management
application. The campaign definition requires the generation of a list of clients to be addressed. The
sources for this target list are list of clients prepared in the previous steps, lists generated directly from
corporate transactional systems or lists from external sources can also be used, e.g. lists of companies or
individuals from various marketing surveys.

There may be any number of source lists, and they can be combined in different ways (merger,
intersection, elimination). Instead of complex queries, several simpler questions can be formulated and
their combination results in a required list.

One example here would be the prevention of addressing customers by campaigns too often. The list is
generated by eliminating those who have been recently addressed from the list of customers the
campaign is targeted at. Elimination is ensured by the 'Exclude' operator used when connecting lists.
Other list connection opportunities via the 'Include', 'Exclude', and 'Intersect' operators are shown in the
following diagram.
 BUSINESS PROCESS SOLUTIONS

1. Include 2. Intersect
Target List A
• All items in List1
• Only items, which are in both List1 X
and List2
• All items, which are in List3 or in X
the result of the previous step X X

Target List C
X • All items from List1
Target List B • All items, which are in List1 or
• All items in List1 List2
• All items, which are in List1 or 3. Include • Items from the previous step
List2 excluding items from List3
• Only items, which are in both List3
and result of previous step 1. Include 2. Include
1. Include 2. Include
X X
X

X
X X

3. Intersect 3. Exclude

Examples of client list integration during the structuring of campaigns. X represents customers who will
be addressed. X within circle 1, 2, or 3 identifies customers from background list 1, 2, or 3.

The campaign definition includes a classification of the products and product packages the campaign
focuses on. This information is used later when evaluating response to the marketing campaign.

Implementing a campaign through selected communication channels.

The first step in implementing a campaign is to plan the individual campaign activities. For example, it
is possible to plan to address a test sample of clients first and then rest of the clients in the list. It opens
the possibility to adapt selection criteria for the campaign after evaluating the response of the test
sample. It minimizes costs and improves efficiency of the campaign. It is also possible to plan an initial
approach via printed letter, followed up after a set interval by, say, e-mail or telephone contact for all or
selected (most important) customers. Preparation includes the production of a template for personified
text to be sent to each customer in the list, or a script scenario for contact center agents.

The second step is the actual communication. Active addressing includes sending a letter or e-mail,
active (outbound) telephone call or delegating the task to contact client directly to sales staff. Passive
addressing means utilizing the information that customer is addressed by campaign while he contact the
company himself i.e. visits the branch or contacts company via telephone. Alternative communication
channels like SMS or WWW can be used after integration of the relevant applications.

Identifying response to a campaign

An integral part of a campaign is a campaign evaluation. The response to the campaign needs to be
identified before the evaluation can be made. There are several strategies designed to identify the
campaign response, some of which may be combined.

Indirect response identification is the simplest solution is from the organizational point of view. If any
of those addressed clients starts to behave in the manner the campaign intended (typically they buy an
 BUSINESS PROCESS SOLUTIONS

offered product, start to use products in the particular way, etc.) in selected time frame, they can be
assumed to be reacting to the marketing campaign. Identifying these customers is just part of customer
analysis upon data warehouse (e.g. group of customers, which bought product is matched to group of
customers addressed by campaign). The advantage of this system is that it is simple. There is no need to
draw up a communication or organization project to identify the response in communication channels
respective transactional systems (contact center application etc).

Another option would be to identify the response directly, i.e. to record whether a client is responding
to the campaign at the time a product or service is ordered, or other anticipated client reaction.
Information of a client's response to a campaign is stored in transactional systems. From here,
information is transferred to the data warehouse as background material for evaluations.

Evaluating the campaign success rate

Information about addressing a client via a specific marketing campaign and information about the
response are available in the data warehouse. As a result, it is possible to use the same analytical
instruments for an evaluation of response and the overall success rate of the marketing campaign as
those used for client analysis.

Customer segmentation
Client segment is a group of clients with specific characteristics. Smaller number of static segments is
usually defined, like major-key-SME accounts etc. The rules for belonging to static segments do not
change during the year usually. Static segments are used for measuring general business performance
and general campaign targeting. They could be also used for dividing responsibility between teams or
departments.

Dynamic segments are defined ad-hoc for the specific purposes and could be easily changed or
dismissed during the time. Dynamic segment is for example a group of customers, who:

• will be targeted by several following campaigns. It simplifies the selection of customers for
addressing by campaign – only customers belonging to specific segments are selected.

• behave accordingly to the campaign intent (e.g. bought particular product). It simplifies the
evaluation of customer response – customers entering the segment in appropriate time frame are
taken as respondents to campaign.

• have the same characteristics summarized from large amount of detailed data. They solve the
situation, when the data are too detailed to be used for client analysis directly. For example
detailed account transactions are used for computing client profitability (by more or less precise
way) and clients are divided into several groups – segments based on it, e.g. most valuable,
valuable, average, losing. These segments could be then easily used for multi-criteria analysis like
“How many most valuable customers are in each region, industry, sales channel?” or “How many
customers churned in each value segment, region, month?”

• has the propensity to particular behavior (e.g. churn, fraud, buy particular group of products)
identified by advanced analytical techniques like data mining.

Evaluation of segment history could be also very useful. Monitoring movements of customers between
segments in time brings the better understanding about how the business and customer portfolio are
changing in more quality than quantity point of view.

Moreover segments and their history can be used as the part of customer life cycle modeling solution.
 BUSINESS PROCESS SOLUTIONS

Segments model stages of the lifecycle model and monitoring inter-segment movements means
monitoring movements between lifecycle stages.

Other Functionality– Mass campaigns, Non-marketing campaigns, Automation of business rules

Components of herein discussed solution offers much more functionality. Some examples follows.

• Mass Campaigns – Campaign management application could be used not only for direct
marketing campaigns but also for mass marketing campaigns planning and execution. Budget
control, multi-staged campaigns, task management for campaign team members etc. could be used
for mass campaigns with no additional effort.

• Non-marketing Campaigns – Totally same infrastructure of solution could be used for addressing
clients for non-marketing purposes. The typical example is collections campaigns. Clients with
payment delay are selected during the preparation phase. The monitored behavior in order to
evaluate response is focused on payments history evaluation. The prerequisite for this is to have
the relevant data transferred from transactional systems into the data warehouse.

• Automation of business rules - Campaign management application enables to trigger campaign

automatically in selected time periods. Moreover the campaign could be triggered only if particular
condition is fulfilled. It opens a wide space for business rules automation. Typical business rule
sounds like “If the customer enter the segment High Propensity to Churn, and simultaneously he
already is in the segment Most Valuable Customers, prepare the script with detailed information
about customer near history and generate task for contact center agent to call the client and
evaluate what’s happening.”